The Tories make it clear that they don’t think the provinces can be trusted with job training

When Jim Flaherty threw a wad of cash on the table and walked out of that meeting with his provincial counterparts a year ago December, everyone said it was the end of an era. The provinces complained there had been no negotiations, but that was simply to say the feds had made no demands. Federal transfers would increase in line with the economy, without conditions.

It’s tempting to see the new Canada Job Grant, announced in last week’s budget, in the same, “take it or take it” spirit. There are promises of negotiations, but as before, the feds seem already to have decided what their outcome will be. Only instead of giving the provinces more money, they would be giving them less.

The $2.5-billion the federal government currently sends the provinces for job training under various federal-provincial agreements would instead be sent to the training institution of an employer’s choice — but only if both employers and the provinces matched the federal grant. Not only would Ottawa be taking back the money it now gives the provinces, it would oblige the provinces to put up their own money if they wanted the benefit of the federal contribution.

Conditional transfers are back, in other words — only with a twist. Rather than using federal money to influence how provinces run programs, like health care, that are largely within their own jurisdictions, the Harper government seems more interested in breaking down provincial obstacles to a well-functioning national market: the economic union, rather than the social union.

Why, after all, have the feds taken such an interest in this? Certainly employers, particularly in fast-growing sectors like oil and gas, are complaining they can’t find enough skilled workers. But why haven’t the provinces done a better job of meeting that demand? The new plan, with its emphasis on direct, voucher-style grants, suggests provincial programs have been too bureaucratic, less focused on “connecting Canadians with available jobs.” But why is that?

For the same reason, economic theory teaches, that training can’t simply be left to employers: because there’s not enough in it for them. Employers may be reluctant to invest sufficiently in their employees’ skills if they fear that any day they could lose them to their competitors. Provinces, likewise, have little interest in training workers for job openings that may exist in another jurisdiction, half-way across the country.

The skills shortage, after all, is not a uniform phenomenon nationwide. The unfilled openings are typically in the resource sectors, mostly in the West; the surplus workers are mostly in the East. Federalizing job training, then, is an implicit recognition that the market for labour is national, not provincial. And if the market for labour is national, so is the market for training.

Well now. Let’s follow the logic of that position for a minute. If the market for community colleges is national, what about the market for universities? If it is better for federal funds to follow the trainee — to be handed out directly, that is, rather than transferred from one bureaucracy to another — does not the same approach recommend itself when it comes to the roughly $10-billion Ottawa now gives the provinces for post-secondary education?

Consider what happens at present when a student leaves his home province to go to university in another. The funding does not go with him. Even with the fee increases of recent years, students in many faculties still pay only a part of the cost of tuition. For the receiving province the arriving student is typically a cost, rather than a benefit, dulling, to whatever degree, the incentive to compete for students’ custom. Would it not make more sense to give the money to students instead (ideally repayable as a share of their future earnings), and let them take it to the institution of higher learning of their choice?

If that scandalizes delicate provincial sensitivities, the provinces could still be responsible for handing out the money — as, in theory, they would still hand out the Canada Job Grants. But federal funds would be used to “encourage” a more national outlook.

Perhaps that sounds far-fetched. But in the absence of such conditions, federal-provincial transfers don’t make a whole lot of sense: they simply allow two groups of politicians to spend the same money twice. And this newer sort of conditionality would certainly fit with the Harper government’s broader economic union agenda.

The same budget, for example, announces a renewed push for a national securities regulator — whoops, I mean a “cooperatively established common securities regulator.” It has also expressed its frustration from time to time with the whole vast array of provincial trade barriers, to the point of threatening to invoke the federal trade and commerce power if they were not dismantled forthwith: by 2010, if memory serves.

For whatever reason, however, the deadline passed, and the threat was never made good on. Possibly it was considered too blunt an instrument to be politically useful. So perhaps it’s time to look instead at the $60-odd billion the federal government now hands over to the provinces every year via various transfer programs, most of it gratis.

Maybe it’s time to look at making these conditional, in the same way as the Canada Job Grant, and for the same reason: because we have, or want to have, a national market, not a series of disconnected provincial satrapies. If the stick won’t work, maybe the carrot will.

Original Article
Source: nationalpost.com
Author: Andrew Coyne